If you are selling a property, one question that often comes up is:

“When do I have to pay the real estate agent’s commission?”

Another common question is:

“Can the agent take their commission from the buyer’s deposit or from my settlement proceeds?”

These are important questions because the deposit, agent’s commission and settlement proceeds are three different things.

Understanding how they work can help sellers avoid confusion before settlement.

What Is the Buyer’s Deposit?

When a buyer signs a Contract of Sale, they may be required to pay a deposit.

The deposit is generally paid by the buyer in accordance with the Contract of Sale.

It is commonly held in the agent’s or conveyancer’s trust account, depending on the arrangements for the transaction.

The deposit is not automatically the seller’s money to spend immediately.

There are rules about when and how a deposit can be released.

Is the Deposit the Same as the Agent’s Commission?

No.

The buyer’s deposit and the real estate agent’s commission are separate matters.

The deposit forms part of the purchase price under the Contract of Sale.

The agent’s commission is a fee payable under the agreement between the seller and the real estate agent.

The fact that the agent may be holding the deposit does not automatically mean the agent can simply take their commission from it.

When Is the Agent’s Commission Payable?

The answer depends on the terms of the agreement between the seller and the real estate agent.

Before signing an authority with an agent, sellers should carefully review:

• The commission rate
• When the commission becomes payable
• Marketing and advertising fees
• Any additional fees
• GST
• What happens if the sale falls through
• Any special conditions

The exact payment arrangements should be confirmed with the real estate agent.

Can the Agent Take Commission From the Buyer’s Deposit?

Do not assume that they can.

A deposit paid under a Contract of Sale is not simply the agent’s money.

There are specific rules governing the handling and release of deposits.

In Victoria, a deposit may be held in a trust account and may not be released to the seller merely because the seller wants to receive it early.

If you are selling a property and your agent says their commission will be paid from the deposit, ask your conveyancer to confirm how the arrangement is being dealt with.

What Happens to the Deposit at Settlement?

In a straightforward sale, the buyer’s deposit forms part of the purchase price.

The deposit has already been paid before settlement, so the remaining balance of the purchase price is dealt with at settlement.

For example:

Purchase price: $800,000
Deposit: $80,000
Balance: $720,000

The exact settlement calculation will depend on the transaction and any applicable adjustments, loan arrangements and other amounts.

The deposit is not an additional amount on top of the purchase price.

Can the Agent’s Commission Be Paid From Settlement Proceeds?

This can depend on the arrangements between the seller, agent and settlement participants.

In some transactions, the agent’s commission may be dealt with as part of the settlement arrangements, subject to the relevant authority and requirements.

However, sellers should not assume that the conveyancer will automatically pay the agent’s commission without the appropriate authority or instructions.

If you want the agent’s commission to be paid from the settlement proceeds, confirm the arrangement with your conveyancer and agent before settlement.

What Are Settlement Proceeds?

Settlement proceeds are the funds remaining after the amounts required to complete the sale have been taken into account.

The calculation may include:

• Purchase price
• Deposit already paid
• Mortgage payout
• Council rate adjustments
• Water adjustments
• Owners Corporation adjustments
• Other settlement adjustments
• Other authorised payments

The amount ultimately paid to the seller is therefore not necessarily the same as the purchase price less the deposit.

Example: How Does It Work?

Imagine you sell your property for:

$900,000

The buyer has already paid:

$90,000 deposit

The remaining purchase price is:

$810,000

At settlement, other amounts may need to be taken into account.

For example:

• Mortgage payout
• Rates adjustment
• Water adjustment
• Owners Corporation adjustment
• Agent’s commission, if appropriately authorised and dealt with through settlement
• Other authorised amounts

The final amount paid to you will therefore depend on the actual settlement figures.

Your conveyancer will prepare or review the settlement statement and explain the relevant amounts.

Does the Agent Get Paid Before Settlement?

This depends on the terms of the agency agreement and the circumstances of the sale.

Some agents may become entitled to commission when a binding contract is entered into, while the timing of payment may be dealt with separately.

This is why sellers should read the authority carefully before signing it.

If you are unsure when the commission becomes payable, ask the agent to explain the terms.

What If Settlement Is Delayed?

This is an important issue.

If settlement is delayed, the timing of payment of the agent’s commission may depend on the agency agreement and the circumstances.

The seller should not assume that a delayed settlement automatically cancels the agent’s entitlement to commission.

If settlement is delayed, speak with your conveyancer and agent about the position.

What If the Sale Falls Through?

This can be more complicated.

Whether the agent is still entitled to commission may depend on:

• The agency agreement
• Why the sale did not proceed
• Whether the Contract of Sale was terminated
• The terms of the authority
• The circumstances surrounding the termination

Your conveyancer can advise on the conveyancing consequences, but the agency agreement should also be reviewed.

What If the Buyer Has Paid the Deposit but Settlement Has Not Occurred?

The seller should not assume that the deposit can simply be used to pay bills or commission before settlement.

The deposit is subject to specific legal and contractual requirements.

If you are considering an early release of the deposit, obtain appropriate advice before agreeing to anything.

Can I Ask the Agent to Wait Until Settlement?

You can certainly discuss payment timing with your agent.

Whether they agree depends on the terms of your agency agreement and the arrangements they have with you.

If you want the commission to be dealt with from settlement proceeds, tell your conveyancer and agent early rather than waiting until settlement day.

What If I Have a Mortgage?

If the property has a mortgage, the lender’s payout will generally need to be dealt with as part of settlement.

This means the seller may not simply receive the entire sale price and then pay the mortgage and agent separately.

The settlement process coordinates the relevant payments.

For example:

Sale price: $900,000

Less:

• Mortgage payout
• Applicable adjustments
• Other authorised payments

The remaining balance is paid to the seller.

The exact figures will depend on the transaction.

Does the Deposit Reduce My Mortgage?

The deposit forms part of the purchase price, but how the mortgage is paid out and how settlement funds are applied is a matter for the settlement process.

The seller should not assume that the deposit has already been used to reduce their mortgage.

Your conveyancer and lender will deal with the relevant settlement calculations.

What Should I Check Before Signing the Agent’s Authority?

Before appointing a selling agent, check:

☐ Commission percentage
☐ GST
☐ Marketing costs
☐ Advertising costs
☐ Administration fees
☐ When commission becomes payable
☐ What happens if the sale falls through
☐ What happens if the contract is terminated
☐ Any exclusive agency period
☐ Any additional fees

If you do not understand the authority, ask the agent to explain it before signing.

What Should I Ask My Conveyancer?

Before settlement, you can ask your conveyancer:

• What is the expected settlement amount?
• Has the buyer’s deposit been accounted for?
• What settlement adjustments apply?
• What mortgage payout is required?
• Is the agent’s commission being paid through settlement?
• Has the appropriate authority been provided?
• What amount should I expect to receive after settlement?

This can help avoid surprises on settlement day.

Buyer’s Deposit vs Agent’s Commission vs Settlement Proceeds

These three terms are often confused.

Buyer’s Deposit

Money paid by the buyer under the Contract of Sale.

Agent’s Commission

A fee payable by the seller to the real estate agent under the agency agreement.

Settlement Proceeds

The amount remaining for the seller after the relevant settlement amounts and authorised payments have been accounted for.

They are not the same thing.

Frequently Asked Questions

Can the real estate agent take their commission from the buyer’s deposit?

Do not assume that they can. The deposit is subject to specific legal and contractual requirements and is not simply the agent’s money.

Can my agent’s commission be paid at settlement?

It may be possible depending on the agency agreement and the settlement arrangements. Confirm this with your agent and conveyancer before settlement.

Is the buyer’s deposit part of the purchase price?

Yes. The deposit generally forms part of the purchase price under the Contract of Sale.

Can I use the deposit to pay my bills before settlement?

You should not assume that you can. The deposit may be held in trust and is subject to rules governing its release.

When does the agent become entitled to commission?

This depends on the agency agreement and the circumstances of the sale. Review the authority carefully before signing.

What happens to the commission if settlement is delayed?

The answer depends on the agency agreement and circumstances. A delayed settlement does not necessarily mean the agent loses their entitlement.

What if the sale falls through?

The agent’s entitlement will depend on the agency agreement and the circumstances in which the sale ended.

Will I receive the full sale price at settlement?

No. The sale price is used to satisfy the relevant settlement amounts, such as the mortgage payout and applicable adjustments. The remaining amount is paid to the seller.

How Prox Conveyancing Can Help

Selling a property involves more than signing the Contract of Sale and waiting for settlement.

Understanding how the deposit, settlement adjustments, mortgage payout and other authorised payments affect your final settlement amount can help you know what to expect.

At Prox Conveyancing, we help Victorian sellers understand their settlement figures and the conveyancing aspects of their property sale.

If you are unsure about your settlement statement, deposit arrangements or what you should receive after settlement, contact your conveyancer before settlement day.

For questions about the terms of your real estate agency agreement or the agent’s entitlement to commission, you should also discuss the matter directly with the agent and obtain appropriate advice where necessary.

About the Author

Meet Sally

Sally Kwok is a Licensed Conveyancer and the Director of Prox Conveyancing. With more than 16 years of experience in the conveyancing industry, she is committed to helping buyers and sellers navigate Victorian property transactions with confidence. Sally is passionate about providing clear communication, practical guidance and personalised service throughout every stage of the conveyancing process.

👉 Learn more about Sally on our About page.

About Prox Conveyancing

Prox Conveyancing is a Victorian conveyancing practice providing professional conveyancing services for residential property transactions across Victoria. We assist buyers, sellers, investors and families with a wide range of conveyancing matters, delivering personalised service, transparent communication and professional support from contract through to settlement.

👉 Learn more about Prox Conveyancing on our About page.

This article provides general information only and is not legal or financial advice. The entitlement to real estate agent commission depends on the relevant agency agreement and circumstances of the sale. Every property transaction is different. If you require advice about your specific circumstances, please contact a qualified legal professional or licensed conveyancer.